Dynamic Research Journals (DRJ)

Journal of Economics and Finance (DRJ-JEF)

Volume 6 ~ Issue 1 (January, 2021) pp: 07-16
ISSN (Online): 2520-7490
www.dynamicresearchjournals.org

An Investigation on the Determinants of Life Assurance Products

Uptake in Zimbabwe
Tendai Towo1, Kosmas Njanike2 and Knowledge Jonasi3
1
Bindura University of Science Education, Faculty of Commerce, Bindura, Zimbabwe. 00263772734713, tendaitowo2@yahoo.com
2
Bindura University of Science Education, Faculty of Commerce, Bindura, Zimbabwe.00263772283902,kosmasnjanike@gmail.com
3
Bindura University of Science Education, Faculty of Commerce, Bindura, Zimbabwe.00263777358085, Jonasiknowledge991@gmail.com

Abstract: The insurance sector is becoming a more and more important component for economic and financial
development. However, the consumption and the density, for both life and non-life insurances varies across
countries. The study seeks to explore the determinants of uptake of life assurance products in Zimbabwe. Data
from Finscope Survey 2014 was used to estimate probit models and for robustness check Linear Probability
Models were used. Using these data, the socioeconomic factors influencing individuals in deciding whether or not
to take up life assurance products in Zimbabwe was analysed. According to our analysis, the decision to take up
insurance policies by individuals is influenced by education level, health status, salary (formal employment),
income, financial advice and being head of the household. There is need to build inclusive financial systems
through different policies by governments and central banks. Financial literacy education and campaigns are
paramount in improving levels of insurance uptake.
Keywords: Life Assurance, Insurance Uptake, Zimbabwe, Insurance Penetration

1. Introduction
The purpose of this study is to investigate the factors that determine life assurance products uptake in
Zimbabwe. A developed and functioning insurance sector is a fundamental condition for economic success. The
objective of insurance is to provide financial stability to individuals, organizations and businesses. As a risk
pooling and transfer mechanism, insurance allows the insured to mitigate pure risks (i.e. risks that involve only
the possibilities of loss or no loss). Examples of such risks are fires, flooding, ill health and unintentional damage
to a third party. Insurance helps business to stay open and individuals to continue their work or education by
providing financial compensation if an insured risk occurs and causes damage (Levin,2012). Even when no loss
occurs, insurance provides peace of mind, a service of considerable, if unquantifiable, value. Life insurance is a
contract between an insured (insurance policy holder) and an insurer (insurance company), where the insurer
promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person
(Mark, 2012). Depending on the contract, other events such as terminal illness or critical illness may also trigger
payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as
funeral expenses) are also sometimes included in the benefits. Typically, life insurance is chosen based on the
needs and goals of the owner. There are many varieties of life insurance. Some of the more common types are
term life insurance, whole life insurance and universal life insurance. Term life insurance is designed to provide
financial protection for a specific period of time, such as 10 or 20 years. With traditional term insurance, the
premium payment amount stays the same for the coverage period you select. After that period, policies may offer
continued coverage, usually at a substantially higher premium payment rate. Term life insurance is generally less
expensive than permanent life insurance. Term life insurance proceeds can be used to replace lost potential income
during working years. This can provide a safety net for the insured’s beneficiaries and can also help ensure the
family's financial goals will still be met, goals like paying off a mortgage, keeping a business running, and paying
for college (Mark,2012). It’s important to note that, although term life can be used to replace lost potential income,
life insurance benefits are paid at one time in a lump sum, not in regular payments like pay checks. Universal life
insurance is a type of permanent life insurance designed to provide lifetime coverage. Unlike whole life insurance,
universal life insurance policies are flexible and may allow the subscriber to raise or lower their premium payment
or coverage amounts throughout their lifetime. Additionally, due to its lifetime coverage, universal life typically
has higher premium payments than term (Levin, 2012; Mark, 2012). Universal life insurance is most often used
as part of a flexible estate planning strategy to help preserve wealth to be transferred to beneficiaries. Another
common use is long term income replacement, where the need extends beyond working years. Some universal
life insurance product designs focus on providing both death benefit coverage and building cash value while others
focus on providing guaranteed death benefit coverage. Whole life insurance is a type of permanent life insurance
designed to provide lifetime coverage. Because of the lifetime coverage period, whole life usually has higher
premium payments than term life. Policy premium payments are typically fixed, and, unlike term, whole life has
a cash value, which functions as a savings component and may accumulate tax-deferred over time (Ward, 2012).

Verified for suitability by Dynamic Research Review (Pvt) Ltd 7|P a g e

 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

Life insurance is an important aspect of the social-economic development of the society. It helps to
safeguard the future while it also ensures some savings that can be used in a later date (Ward,2012). Life insurance
provides the dual benefits of savings and security. Mark (2012) termed life insurance as a key sector whose
contribution to the development of any country’s economy cannot be over-emphasized. Apart from giving security
to the insured against exposure to risk, life insurance is a mobilizer of domestic savings, inculcates the culture of
thrift, and helps to increase income and create wealth (Truett and Truett 2010). It can also relieve pressure on
social welfare systems. Despite its importance, the penetration of life insurance remains relatively low in
developing countries as compared to the developed countries where life insurance penetration is quite high.
Insurance services seem not to have been so accepted enthusiastically in developing countries. Yaari, (2009)
attributes the low penetration of insurance in third world countries like Zimbabwe to lack of disposable income.
In a country where many people live below poverty line, it is difficult for people to think about future security.
For many, life is simply about basic needs; food, shelter, clothing and basic education. Many people argue that
the future will take care of itself. There are a number of studies done on life assurance issues in many other
developing countries but there is none that have considered the determinants of life assurance products success in
Zimbabwe using cross-sectional data. Therefore, there is need to investigate the demand factors influencing life
assurance product success in Zimbabwe. The results will be important for life assurance firms, financial regulators,
IPEC and other firms that are into insurance products the world over.
According to the KPMG Insurance Penetration Circa 2015 the level of insurance penetration measured
as a percentage of premiums to GDP for Africa sits at 3.5%. This is relatively higher than the emerging markets
average of 2.72% but much lower than the average of advanced markets of 8.27% and the global average of
6.28%. The average premium per capita for Africa was only $66 in 2013 relative to the world average of $651
and advanced markets of $3620. Similar to many other markets in the region, Zimbabwe’s insurance industry still
remains in the early stage of development (Fitch Solutions Report). Across the market demand is hindered by low
average income level as well as by limited awareness of the benefits of insurance cover beyond mandatory lines.
The PwC report in 2018 put Zimbabwe’s insurance penetration rate at 4.9%. South Africa was ranked the highest
with a penetration rate of 16.99% followed by Namibia at 6.69%, Lesotho at 4.76% and Mauritius at 4.18%.
Other African countries like Mozambique, Angola, and Kenya have a penetration rate estimated at 1.3%, 3% and
1% respectively, according to the Willis Towers Watson report on Sub Saharan Africa insurance. IPEC says
Zimbabwe’s life assurance sector achieved a gross premiums written of $360.3million while the non-life
assurance underwrote $236.47 million . Both these figures represent about 3.5% of Zimbabwe’s gross domestic
product. According to a Finscope Survey in 2014, 70% of adults in Zimbabwe were not insured. Of the 30% who
had insurance, 77% of these were mainly skewed towards life assurance policies. Zimbabwe may boast of more
than 90% adult literacy rate (UNDP,2015) in the country but has 69% of the population living below the poverty
datum line which was USD500 as at 31 December 2016 (ZIMSTAT, 2017), hence it was noted that there was a
huge gap on insurance uptake and there was need to increase awareness as well as more products that suit the
needs of the current market. While people have a general knowledge of insurance this did not translate to an
uptake of insurance products due to numerous challenges. In 2009 the Zimbabwe insurance sector, just like any
other financial services sector suffered enormous confidence challenges when the economy dollarized eroding the
values of most bank balances (Ministry of Finance,2010). Disposable incomes became low resulting in the general
populace not prioritizing insurance uptake. In 2017, IPEC rolled out the Microinsurance Framework to tap into
the group in a bid to increase insurance penetration. The aim of this study is to point at the most important factors
which determine life insurance uptake in Zimbabwe. The author’s motivation for partaking this research is based
on the notion that the level of stability of both the financial system and economic development of a country is
significantly qualified by the sector of life insurance. The rest of the paper is arranged as follows: Section 2
presents Literature Review; Section 3 describes the data used; Section 4 outlines the research methods used;
Section 5 reports, analyses and discusses the results; and Section 6 concludes.

2. Literature Review
The major theory to be surveyed in the literature is based on the premise that life insurance uptake
provides the dual benefits of savings and security (Ward,2012). The demand for life insurance products depends
on different demographic, economics and other factors, as well as factors depending on the insurers themselves
(Zietz, 2013). Beck and Webb, (2013) point out to the importance of financial development of the country, social
security, inflation rate, citizens’ income and population on the trends of life insurance. Yuan and Jiang (2015)
analysed factors affecting the demand of life insurance in Asian countries. Their results indicate that level of
income, development of insurance market, level of education, development of social security pension, children
dependency ratio and elderly dependency ratio mainly affect the demand for life insurance. In a study focusing
on factors influencing the intentions to uptake life insurance policies in Western Balkan countries, Novovic et al
(2017) found the following determinants to be significant: cultural beliefs; service quality; legal framework; and
interest rates. However, the study did not consider determinants such as Location, Age, Gender, Marital status,

www.dynamicresearchjournals.org 8|Page
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

Employment history, medical history and Level of Education. Li et al (2017) came to the conclusion that the
demand for life insurance is positively correlated to income, education and financial development of the country,
while there is a negative connection between interest and inflation rate on the financial markets. Luciano at al.
(2016) analysed life insurance ownership by Italian households and found out the differences between two types
of contracts, traditional life and term life insurance. They showed that, in all cases, women were less likely to be
insured than are men. On average, citizens from urban environment are more familiar with risk and risk
management, compared to those living in rural areas, which indicates to the positive effect of urban development
on life insurance demand (Beck and Webb, 2003).
Education is a demographic determinant expected to have a positive impact on demand for life insurance
products. Liebenberg and Zietz (2013) discovered that published researches show different results for some
determinants of life insurance demand, including the education itself. Analysing households in the USA, Hau
(2010) also emphasizes that it is unclear whether education affects the demand for life insurance or not. As
educational systems vary in different countries and regions, it is a question of whether and how deeply the
insurance is being investigated from all its three aspects (economic, legal and mathematical) so that the citizens
can understand the product of life insurance itself. Truett and Truett (2010) emphasize that high education is not
a guarantee for a person to understand the complexity of life insurance as a product because insurance is not
necessarily studied at all universities in detail. Kjosevski (2012) while analysing the determinants of life insurance
demand in Central and South Eastern Europe, found that higher level of education led to a higher life insurance
penetration and higher life insurance density. This finding suggests a need for elevating the education level of
population, because it would be useful to enhance the understanding of financial products presented on the market
and possible benefits from using them by potential consumers. According to Outreville (2006), individuals with
higher level of education are more aware of the risk and importance of risk management. Therefore, the level of
education does increase risk aversion and encourages the demand for life insurance (Burnett and Palmer, 2004;
Truet and Truet, 2010). Also, highly educated people have higher incomes and in long term, they expect the
increase of their incomes compared to the citizens with lower educational level, which makes them purchase life
insurance. Liebenberg et al (2012) concluded that although research results on the impact of education on demand
for life insurance are different, managers and other professional and self-employed persons mainly hold a life
insurance policy. Furthermore, this leads to the conclusion that the level of economic education does have a
significant positive impact on demand for life insurance. It is expected that a higher level of education in a
population will be positively correlated with the demand for any type of life insurance product. The level of a
person's education may determine his/her ability to understand the benefits of risk management and savings. A
higher level of education might therefore increase an individual's level of risk aversion. Education may also
increase the demand for pure death protection by lengthening the period of dependency, as well as increasing the
human capital of, and so the value to be protected in, the primary wage earner. Truett and Truett (2010) and
Browne and Kim (2013) found a positive relationship between life insurance consumption and the level of
education.
Different studies observe the effect of population age on economic performances of developed countries
(Cutler, et al, 2010). These studies show that population aging has a negative impact on saving. On the other hand,
middle aged and older people should be observed as a target group for life insurance (Celik and Kayali, 2009).
Young people tend to spend more, while middle aged and old people are more aware of risk of death and limited
incomes after retirement. Sen and Madheswaran (2013) analysed determinants of life insurance consumption in
Asian economies and found that youth dependency ratio was significant determinant of life insurance
consumption. Lester and Rocha (2011), consider that the reason of the positive impact on demand for life
insurance is the necessity of employed parents to secure their children against the risk of parents’ early death.
Therefore, the relation between life expectancy and demand for life insurance can be ambiguous. One of the
reasons is that people with longer life have less need for the insurance against death (lower mortality risk), but
they have need savings through life insurance products more, which leads to conclusion that the effect of life
expectancy on demand for life insurance depends on the insurance product (Sen,2007). Lower mortality risk
(longer life expectancy) reduces demand for insurance against death risk and increases the demand for products
including the saving component. It can be expected that longer life expectancy has a positive effect on life
insurance and decrease of insurance price (Kugler,2005). Most empirical cross-country studies show that longer
life expectancy has a positive impact on life insurance, a higher ratio of old dependents to working population is
assumed to increase the demand for both the mortality and the savings component of life insurance policies. While
the theoretical work focuses mostly on the life insurance policies held by primary wage earners, life insurance
policies held by retirees have gained importance in many developed countries (Zietz,2013, Levin,2012).
Furthermore, in countries with a larger share of retired population, savings through life insurance policies as well
as protection against superannuation gains importance.
According to Truett and Truett (2010), next to age, gender is the biggest determinant of pricing. Insurance
carriers use statistical models to approximate how long someone with a specific profile will be around. The fact

www.dynamicresearchjournals.org 9|Page
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

is that women, on average, live nearly five years longer than men. And because they’re usually paying premiums
for a longer period of time than males, they enjoy slightly lower rates (Klein & Mayer, 2011).
The underwriting process for most carriers includes a medical exam in which the company records height and
weight, blood pressure, cholesterol, and other key health metrics. They may also require an electrocardiogram
(ECG) to check your heart in some cases. It’s important to get any serious conditions like high cholesterol and
diabetes managed before searching for life coverage to ensure a competitive rate. A family history of stroke,
cancer or other serious medical conditions may predispose the subscriber to these ailments and lead to higher
rates. Carriers are usually interested in any conditions parents or siblings have experienced, particularly if they
contributed to a premature death. Some carriers put more emphasis on family’s health history than others, but it’s
likely to have some impact on the premium. Smoking puts one at a higher risk for all sorts of health ailments, it’s
a red flag for insurance companies. In fact, it’s not uncommon for smokers to pay more than twice as much as
non-smokers for comparable life coverage (Browne and Kim, 2013).
On average, citizens from urban environment are more familiar with risk and risk management, compared
to those living in rural areas, which indicates to the positive effect of urban development on life insurance demand
(Beck and Webb, 2013). Dragos (2014) showed that urban development has a significant impact on demand for
life insurance in Asia, but not in Europe. Sen and Madheswaran (2007) and Sen (2008) discovered that in 13 Asian
economies, there was a positive relation between urban development and demand for life insurance products.
Nesterova (2008), based on the study from Central Eastern Europe (CEE) and some countries from former Soviet
Union, showed that the level of urban development had no significance for life insurance demand. Zerriaa and
Noubbigh (2016), based on the study from Middle East and North Africa region, also showed that urbanisation
did not appear to influence life insurance demand. Economies with a higher share of urban to total population
have higher levels of life insurance consumption. The concentration of consumers in a geographic area simplifies
the distribution of life insurance products, as costs related to marketing, premium collection; underwriting and
claim handling are reduced.
Insurance consumption should rise with the level of income, for several reasons. First, an individual’s
consumption and human capital typically increase along with income. This can create a greater demand for
insurance to safeguard the income potential of the insured and the expected consumption of his/her dependents
(Levin,2012). Second, insurance may be a superior good, in as much as increasing income may explain an
increasing ability to direct a higher share of income towards retirement and investment-related life insurance
products. Finally, the overhead costs associated with administrating and marketing insurance make larger size
policies less expensive per shilling of insurance in force, which lowers the price of life insurance policies.
Campbell (2000), and Outreville (2006) have both shown that the demand for life insurance is positively related
to income, using both aggregate national account data and individual household data. Browne and Kim (2013)
investigated factors influencing the demand for life insurance through regression analysis in 1980 and1987. As an
income measure they used available income. The research showed that income is a variable statistically significant
and positively correlated in all applied models so they confirmed the positive correlation between income and the
demand for life insurance (Novovic 2017).
The existing literature has the following weaknesses; non considered location, marital status,
employment history, social media and financial advice as factors affecting the demand for life insurance products;
and (2) no study on determinants of life insurance products uptake was done in Zimbabwe. There is need for
identification of all factors contributing to accessibility, affordability and appropriateness of insurance products to
all segments of the population ((Rani, 2010).

3. Methodology
The Finscope Survey uses a random selection of eligible members in each household by Kish Grid. The
survey carried out 4000 face to face interviews across all provinces in Zimbabwe covering both rural and urban
areas. The survey provides very valuable information that allows us to analyse elements of insurance uptake that
have not been studied before due to lack of appropriate information at the national level (Table1). The survey
generates information about the characteristics and statistics of users and non-users of insurance services.
Finscope Survey 2014 was carried out by Finmark Trust, ZIMSTAT and Ministry of Finance in 2014. To address
the research objective that seeks to determine factors influencing the uptake of insurance in Zimbabwe an
econometric model was created. We have estimated probit models to investigate the determinants of uptaking
insurance products by an individual. The methodology used is similar to that used in Martinez et al. (2013).

Table 1: Descriptive Statistics

Characteristics of Individuals Frequency % Mean Std Dev.
Total number of respondents 4000 100
Life assurance 0.0560472 0.230126
Yes 740 18.5
No 3 260 81.5

www.dynamicresearchjournals.org 10 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

Location 0.346 0.4757527

Urban 1 384 35
Rural 2 616 65
Gender 0.42475 0.4943668
Male 1 699 42
Female 2 301 58
Marital status 0.65075 0.4151404
Married 2 603 65
Not married 1 597 35
Level of Education 2.94825 0.9671485
None to Early Child Development 178 4
Grade 1-7 1375 35
Form 1-6 2087 52
Dip/Cert after Primary 37 1
Dip/Cert after secondary 214 5
Graduate/Post Graduate 109 3
Average (years) 40.1025
18-25 785 20
26-35 1092 27
36-45 860 21.5
46-55 512 12.8
56-65 400 10
66-75 227 5.6
76-85 124 3.1
Employment History 0.94075 0.2361215
With History of employment 3763 94
No history of employment 237 6
Level of income($) 0.051231
No income 262 6.55
1-100 2211 55.28
101-200 480 12
201-300 285 7.15
301-400 158 3.95
401-500 153 4
501-1000 110 3
1001-2000 30 0.75
2001-3000 5 0.12
3001-4000 4 0.1
4001 and above 2 0.05
Refused/Don’t know 282 7.05
Health status 1.65075 0.8178885
Good 2139
Satisfactory 1260
Not satisfactory 460
Poor 141

Financial advice 0.05175 0.2215496

Yes 207
No 3793
Social media 0.2305571 0.4212475
Using social media 836
No 1105
No access 1685
Salaried 0.1775 0.3821391
Receiving salary 3290
Not receiving salary 710
Head 0.5785 0.493861
Yes 2,314 57.85
No 1,686 42.15
Internet 0.12275 0.328191
Yes 491 12.28
No 3,509 87.72
Source: Finscope Household Survey (2014)

www.dynamicresearchjournals.org 11 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

EMPIRICAL RESULTS
LPM Probit
VARIABLES Life Life

Education 0.0232*** 0.106**

(0.00801) (0.0707)
Employment History 0.0505 0.501
(0.0381) (0.349)
Health Status -0.00818** -0.0950**
(0.0122) (0.130)
Social Media 0.0153 0.153
(0.0114) (0.120)
Salaried 0.0656*** 0.587***
(0.0190) (0.184)
Internet 0.00694 0.0818
(0.0217) (0.202)
Married -0.0477 -0.344
(0.0297) (0.288)
Income 0.00655* 0.125***
(0.00346) (0.0467)
Financial Advice 0.0619** 0.359*
(0.0277) (0.229)
Age 0.00326*** 0.0317***
(0.000711) (0.00742)
Gender -0.0283 -0.317
(0.0191) (0.203)
Location -0.00189 0.0294
(0.0178) (0.180)
Head -0.0351* -0.294*
(0.0213) (0.226)
Constant -0.0534 -3.215***
(0.0643) (0.696)

Observations 4,000 4,000

R-squared 0.101
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Source: Stata 14

3.1 Probit Model

In this analysis the probit models take as the dependent variable, BA, whether an individual has a life
insurance policy or not (1 if the person has a policy and 0 if not). In a binary response model, interest lies primarily
in the response probability P(BA=1|x)=P(BA=1|x1, x2, ..., xk), where BA is the insurance uptake indicator and
x is the full set of explanatory variables.
P(BA=1|x)= P(BA=1|x1 , x2 , …, xk),
where,
BA is an insurance uptake indicator
x is the full set of explanatory variables.

3.2 The Linear Probability Model

The Linear Probability Model (LPM) is used largely to enable us to directly obtain coefficient estimates
rather than the estimation of scaled coefficients that are obtained with the probit model which then need to be
transformed. Since the focus of this paper is on factors affecting the decision to take up life assurance policies,
this should not be a problem, as both the LPM and the probit model generally produce similar coefficient estimates
at the mean (Wooldridge, 2009).
In this study probit models are estimated alongside LPM for robustness check. In the probit model, G is
the standard normal cumulative distribution function (cdf), which is expressed as an integral:
G(z)= F(z)= z −1 F(v)d v,
where ɸ(z) is the standard normal density and ɸ(z)= (2 p )−1/2exp(−z2 /2).

www.dynamicresearchjournals.org 12 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

We then conduct maximum likelihood estimation as a series of probit models. The binary choice model
was created from Q8.4 in the questionnaire that asks the following question: ‘Do you currently have a life
assurance policy in your name? The dependent variable, the decision to have a life assurance policy (BA) with
any insurance company depends on many explanatory variables. Thus, the following model was estimated:
Pr(BAi)= β0+ β1maritali + β2Educi + β3employmenti + β4 healthstatusi+β5facilitiesi +β6salariedi +β7incomei
+β8financialadvice + β9age +β10location+ β11gender + ei

3.3. Variables included in the model

3.3.1 Education Variable
The education variable was found to be significantly related to one having/not having a life assurance
policy. The more educated one is the higher the probability of being a life policy holder.

3.3.1 Employment variable

Employment history was not significant but positively correlated to holding a life policy. Though not
significant results reveal that one who was once employed had a greater chance of being a life policy holder than
one who was not once employed.

3.3.2 Health status variable

The health status variable was significant and negatively related to holding a life assurance product. As
the health status deteriorates the greater the chance of one being a life policy holder. This may be driven by the
fact that as health status deteriorates one would want to invest in the future and there is a likelihood of not being
economically active.

3.3.3 Social media variable

Social media variable was found not significant to holding a life policy with a positive correlation. One’s
use of social media had no significant influence on an individual’s life policy status. However, though not
significant the positive relationship reveals that a social media user is more likely to be a holder of life assurance
policy.

3.3.4 Salaries variable

Salaries variable was found to be significant to having a life policy with a positive correlation. This
implies that a formally employed individual is more likely to be having a life policy than one not formally
employed.

3.3.5 Internet variable

Internet variable was not significant but positively related to life policy status. Whether one had access
to internet or not had no significant influence on one’s life assurance policy. Though not significant the positive
relationship shows that one with access to internet was more likely to be having a life assurance policy.

3.3.6 Marital status variable

The marital status variable was found not significant with a negative correlation to life policy status.
Whether one was married or not had no significant influence on one’s choice on life assurance product. However
though not significant the negative relationship shows that the married were less likely to be life policy holders
than those not married.

3.3.7 Income variable

The income variable was significant and positively correlated to life policy status. The higher one’s
income is the more likely one becomes a life policy holder.

3.3.8 Financial advice variable

Financial advice was found to be significant and positively correlated to life policy status. When one is
financially included the higher the probability of that individual to have a life assurance policy.

3.3.9 Age variable

The age variable was found to be significant and positively related to life policy assurance. As one gets
older the higher the probability of becoming a life assurance policy holder in Zimbabwe.

www.dynamicresearchjournals.org 13 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

3.3.10 Gender variable

The gender was found not significant to holding a life assurance policy with a negative relationship. This
implies that one’s gender had no significant impact on one’s life assurance policy. However the negative
relationship reveals that a woman was more likely to have a life policy than a male.

3.3.11 Location variable

Location variable was found to be not significant to holding a life assurance policy with a positive
relationship. Whether one is in urban or rural areas had no significant influence on the individual’s life assurance
policy status.

3.3.12 Head of household variable

The head variable was found significant with a negative correlation. Being the head of the house or not
had no significant influence on one’s life assurance policy status.
The following variables were found significant to one having or not having a life assurance product:
education, health status, salaried or form of employment, income, financial advice, age and head. Variables not
significant were as follows: employment status, social media, internet, married, gender and location. The variables
that were not significant had either a negative or positive relationship.

4. Discussion
Education was positively related to having a life policy cover. The more educated one is the better the
understanding of risk management issues and a quicker appreciation of a financial product features. This was
consistent with literature predictions as in many parts of the world level of education influences the uptake of
financial products (Curak, Dzaja and Pepur, 2013).
Employment history was not significant. Once one was formally employed it may be that s/he could be
having a life assurance policy. In Zimbabwe because of economic instability once one is out of employment
income to cater for monthly premiums may not be enough. Employment history may not influence particularly
when one has long left formal employment that brought monthly or periodic income. This contradicts Levin (2000)
who found employment status having a significant relationship to insurance policy status.
Health status was found significant as one is likely to be more conscious of devastating effect of health.
If one has a chronic disease for example s/he is likely to prepare for any eventuality unlike the fit and healthy
individual. The more deteriorating one’s health is the more likely one is a life policy holder. This result was
consistent with existing literature that found health status being influential (Outreville, 2006).
Social media was found not significant but it can be utilised in branding of insurance products. In
Zimbabwe the financial institutions may be yet to use such platforms to attract and convince customers as well as
marketing the brand (Ward, 2012). Some sectors are far ahead in using social media platforms for
communications, brand promotion among others to grow their clientele.
Whether one is salaried (formally employed) or not is influential in determining life policy status in
Zimbabwe. With constant and regular incomes one is able to budget and sustain monthly payments for a life
assurance policy. This result is consistent with other studies (Ward, 2012).
Internet was found not significant in influencing life assurance policy uptake in Zimbabwe. The world
has become small because of ICT development and the use of internet has shifted business operationalization and
product delivery. Other sectors have improved incomes and growth by taking advantage of internet use.
Zimbabwe’s use of internet may be low such that its use may not affect insurance products uptake. This contradicts
a number of studies that found internet access having an influence on financial products or institution growth.
Whether one is married or not had no influence on an individual’s insurance policy status. However this
contradicted the findings of other studies that found marriage having an impact on insurance status (Browne and
Kim, 2013).
Income was found significant as those with more income are likely to have more disposable income to
sacrifice for risk management purposes. Those with more income have greater choice of financial products to
invest in. This was in line with a number of studies that found income having influence on financial products
status (Liebenberg, 2013).
Financial advice was significant in influencing life policy assurance status. Financial advice entails
getting requisite information of a product from an adviser. One is able to make an informed decision with advice
from an expert and is likely to respond positively on risk management issues. The result was in line with other
studies that reported that the greater the income the more likely one has a life assurance product policy (Ward,
2012).
Age was found significant on contributing to life policy status. The older one gets the more conscious
one becomes with life issues hence investing in a life policy. The other reason could be that as one gets older s/he
is more likely to be financially stable and able to have monthly commitments. This was also in line with other
studies done (Novovic et al, 2016).

www.dynamicresearchjournals.org 14 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

Gender was not significant to influencing life policy status. This was in contradiction to some studies
that found men or women more likely to have financial products (Kjosevski, 2012).
Location was insignificant in determining life policy status in Zimbabwe. This contradicts some studies
that found being in urban or rural areas influenced life policy status (Beck and Webb, 2013). Those in the rural
areas are usually found wanting in terms of financial products choice and use because of distance from the service
providers.
Being the head of the household was found significant because of the responsibilities one may have. Also
having a number of dependencies may make one worry about the future and prompted to cover against risk. This
is consistent with other studies that found that the head of the house is likely to invest in financial products (Rani,
2010).

5. Conclusion
A life insurance policy is vital in one’s life as it assists in paying off debts, provide for dependencies,
peace of mind, supplement retirement and protect business. The current study found that life insurance policy in
Zimbabwe is determined by the following factors: education level; health status; salaried (formal employment);
income; financial advice; and being head of the household. It is important for the government, financial players
and other stakeholders to ensure an improvement in uptake of life insurance products as they go a long way in
managing risk in people’s lives.
Financial literacy programmes are required to conscientise individuals on the need to cover against risk
exposures. Policies must be aimed at improving education levels, income per capita and financial advisory boards
or programmes to encourage more to invest in such products. Financial players can also try to brand their products
through different channels that include internet and social media to improve the percentage of people taking life
insurance products. Products can also be developed that do not require monthly subscriptions but an annual or bi
annual payment because of high levels of informal jobs prevailing in the country that bring irregular and
inconsistent income.
There is also need to research on effectiveness of insurance products awareness programmes in
Zimbabwe. This will provide an insight on the effective campaigns to improve levels of people with life insurance
products in the country.

Acknowledgements
The researchers would want to thank Finmark Trust for the permission to use to use their survey data.

Disclosure statement
No potential conflict of interest was reported by the author.

REFERENCES
[1]. Beck, T., Webb, I. (2013). Economic, demographic and institutional determinants of life insurance
consumption across Countries. The World Bank Economic Review. 17(1), pp. 51–87.
[2]. Browne, M. J., Kim, K. (2013) An International Analysis of Life Insurance Demand, Journal of Risk and
Insurance, Vol. 60, No. 4, pp. 616–634, doi: 10.2307/253382
[3]. Burnett, J. J., Palmer, B. A. (2014). Examining Life Insurance Ownership through Demographic and
Psychographic Characteristics. The Journal of Risk and Insurance. 51(3), pp. 453-467.
https://doi.org/10.2307/252479
[4]. Curak, M.; Dzaja, I.; Pepur, S. 2013. The Effect of Social and Demographic Factors on Life Insurance
Demand in Croatia. International Journal of Business and Social Science Vol. 4 No. 9.
[5]. Cutler, D. M., Poterba, J. M., Sheiner, L. M., Summers, L. H. (2010). An Aging Society: Opportunity or
Challenge. Brookings Papers on Economic Activity. (1), pp. 1-73.
[6]. Dragos, S.E. (2014) Life and non-life insurance demand: the different effects of influence factors in emerging
countries from Europe and Asia, Economic Research Ekonomska Istraživanja, Vol. 27, No. 1, pp. 169–180,
doi: 10.1080/1331677x.2014.952112.
[7]. Finscope Consumer Survey Zimbabwe, 2014. Survey conducted by Zimbabwe National Statistics Agency
(ZIMSTAT) funded by FinMark Trust and commissioned by the Ministry of Finance.
[8]. Global Findex, 2017. The Global Financial Inclusion Database. The World Bank. http://econ.
worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/
EXTFINRES/EXTGLOBALFIN/0,,content.html Accessed 15 April 2019.
[9]. Hau, A. (2010). Liquidity, estate liquidation, charitable motives and life insurance demand by retired singles.
The Journal of Risk and Insurance. 67(1), pp. 123–141. https://doi.org/10.2307/253680
[10]. Kjosevski, J. (2012) The determinants of life insurance demand in central and Southeastern Europe,
International Journal of Economics and Finance, Vol. 4, No. 3, pp. 237–247, doi: 10.5539/ijef.v4n3p237.

www.dynamicresearchjournals.org 15 | P a g e
 An Investigation on the Determinants of Life Assurance Products Uptake in Zimbabwe

[11]. Kugler, M., Ofoghi, R. (2005) Does Insurance Promote Economic Growth? Evidence from the UK Money
Macro and Finance (MMF) Research Group Conference [Internet], pp. 1–27, Available at: <
http://repec.org/mmfc05/paper8. pdf > (Accessed on December 4, 2016).
[12]. Levin, A., Lin, C.F., Chu, C-S.J. (2012) Unit root tests in panel data: Asymptotic and finite sample properties,
Journal of Econometrics, Vol. 108, No. 1, pp. 1–22, doi: 10.1016/s0304-4076(01)00098-7.
[13]. Li, D. (2007) The Demand for Life Insurance in OECD Countries, The Journal of Risk and Insurance, Vol.
74, No. 3, pp. 637–652, doi: 10.1111/j.1539-6975.2007.00228.x.
[14]. Liebenberg, A. P., Carson, J. M., Dumm, R. E. (2012). A dynamic analysis of the demand for life insurance.
The Journal of Risk and Insurance. 79(3), pp. 619–644. https://doi.org/10.1111/j.1539-6975.2011.01454.x
[15]. Luciano E., Outreville J.F., Rossi M. (2016) Life Insurance Ownership by Italian Households: A Gender-
Based Differences Analysis, The Geneva Papers on Risk and Insurance – Issues and Practice, Vol. 41, No. 3,
pp. 468–490, doi: 10.1057/gpp.2016.7.
[16]. Martinez, CH, Hidalgo, XP & Tuetsa, D, 2013. Demand factors that influence financial inclusion in Mexico:
Analysis of the barriers based on the ENIF survey. BBVA Research. Working Paper No. 13/37. Mexico City,
1-23.
[17]. Milijana Novović Burić et al. • Impact of economic factors on life insurance development... Zb. rad. Ekon.
fak. Rij. • 2017 • vol. 35 • no. 2 • 331-352
[18]. Nesterova, D. (2008). Determinants of the demand for life insurance: Evidence from selected CIS and CEE
Countries. Master thesis. National University “Kyiv-Mohyla Academy”. pp. 1–49. URL:
http://www.kse.org.ua/ uploads/file/library/2008/nesterova.pdf
[19]. Outreville, F. J. (2006) Life Insurance Markets in Developing Countries, Journal of Risk and Insurance, Vol.
63, No. 2, pp. 263–278, doi: 10.2307/253745.
[20]. Sen, S. (2007) Are Life Insurance Demand Determinants valid for Selected Asian Economies and India?
Institute for Social and Economic Change. Paper for Presentation at Annual Meeting of APRIA, [Internet],
pp. 1–27, Available at: <:https://www.scribd.com/document/230968492/13507Paper-APRIA-SubirDraft>
[Accessed: February 11, 2017].
[21]. Sen, S., Madheswaran, S. (2013) Regional determinants of life insurance consumption: evidence from
selected Asian economies, Asian-Pacific Economic Literature, Vol. 27, No. 2, pp. 86–103, doi:
10.1111/apel.12024.
[22]. Truett D.B., Truett L.J. (2010) The Demand for Life Insurance in Mexico and the United States: A
Comparative Study, The Journal of Risk and Insurance, Vol. 57, No. 2, pp. 321–328, doi: 10.2307/253306.
[23]. Ward, D., Zurbruegg, R. (2012) Law, Politics and Life Insurance Consumption in Asia, Geneva Papers on
Risk and Insurance, Vol. 27, No. 3, pp. 395–412. doi: 10.1111/1468-0440.00181.
[24]. World Bank, 2016. The Global Financial Development Report 2016: Long-term finance.http://
worldbank.org/financialdevelopment , Accessed 8 April 2019.
[25]. Yuan, C., Jiang, Y. (2015). Factors affecting the demand for insurance in China. Applied Economics. 47(45),
pp. 4855-4867. https://doi.org/10.1080/00036846.2015.1037437
[26]. Zerriaa,M., Noubbigh, H. (2016) Determinants of Life Insurance Demand in the MENA Region, The Geneva
Papers on Risk and Insurance – Issues and Practice, Vol. 41, No. 3, pp. 491–511, doi: 10.1057/gpp.2016.1.
[27]. Zietz, E. N. (2013) An examination of the demand for life insurance, Risk Management and Insurance
Review, Vol. 6, No. 2, pp. 159–191, doi: 10.1046/j.1098-1616.2003.030.x.
[28]. ZIMSTAT, 2017. Statistics at a glance. http://www.zimstat.co.zw/index.php?option=com_
content&view=article&id=18:statistics-at-a-glance, Accessed 16 April 2019.

www.dynamicresearchjournals.org 16 | P a g e